Microgrid Technology May be Taking Off Faster than Expected

Rapid disruption in the electric power world has skeptics changing their minds about how quickly microgrid technology will take off. Demand Energy’s Doug Staker says he numbers himself among them.

Doug Staker, Demand Energy

With the business case proving itself more quickly than many originally envisioned, microgrid technology is going to “accelerate faster than most believed,” said Staker, who leads the business development group for Demand Energy, an Enel company.

By way of example, Staker will present case studies at Microgrid 2017 — November 6 in Boston — of microgrids his company has developed.

Microgrid 2017 was sold out! Register now for Microgrid 2018 in Chicago.

In a recent interview, he cited falling costs for solar and energy storage as a key reason “interest in microgrids is really kicking up.”

Solar plus storage systems, often built into contemporary microgrids, are beating the status quo technology – diesel back-up generators – on costs when installed in certain remote microgrids, he said.

He finds the cost proposition even more interesting for grid-connected microgrids in places like New York, where demand charges run as high as $22-$40/kW and capacity challenges exist. Solar plus storage can act as firm capacity in these markets and help bring down the costs.

“When we look in those markets – especially where there are incentives for grid stress relief – it is cost effective,” Staker said.

In addition, globally utilities are beginning to view microgrids as non-wires alternatives, a technology that offers better economics to solve certain problems than construction of new transmission and distribution lines. By way of example, he described a utility in Canada, where lines can run great expanses, with costs for transmission at $2 million per mile and distribution $150,000 to $500,000 per mile.

Given the expense of expanding the grid, utilities are realizing “it may be more cost-effective to manage the peak,” he said.

Most important, forward-thinking regulators, such as those in New York, are working on re-aligning incentives for utilities, so that they can achieve earnings on alternatives. Consolidated Edison’s Brooklyn Queens Demand Management program is one of the first and most highly publicized of such programs.

“You’ve heard lots people talk about performance-based mechanisms. They are starting to frame up what that means,” he said.

Today utilities capture earnings through capital projects, but regulators are exploring ways to instead create incentives that are tied to improved system metrics.

“That’s huge. I think that is going to be one of the bigger game changers out there. Now pile on top all of the requirements around resiliency, and I think you have a perfect storm converging,” he said.

In short, costs are falling for microgrid components. Regulators are starting to incentivize utilities to build them as non-wires alternatives. And businesses and consumers are demanding them to keep the power flowing when the central grid fails.

Further, the recent round of North American hurricanes crystallized the notion of resiliency for many businesses and consumers, according to Staker. As the energy industry tries to put a value on resiliency, users increasingly find it to be priceless. “This summer has heightened everyone’s awareness,” he said. Nothing will do that more quickly than “climbing up 50 flights of stairs to deliver food and water to people.”

Elisa Wood is the chief editor of MicrogridKnowledge.com. She has been writing about energy for more than two decades for top industry publications. Her work also has been picked up by CNN, the New York Times, Reuters, the Wall Street Journal Online and the Washington Post.

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